Transocean Execs Keep Most Of Their Bonuses

Although five Transocean executives will donate their safety bonuses—a total of $250,000—to families of 11 workers killed in the Deepwater Horizon disaster, the executives retain other awards associated with the 86-day oil spill in the Gulf of Mexico.
One vice president retains a $75,000 bonus he received for managing the spill response, and all five retain larger cash incentives and millions in stocks and options that the company's Annual Report justifies in part because of the disaster.
Transocean Ltd. announced the donation on Tuesday amid outrage over an Annual Report that described 2010 as “the best year in safety performance in our company’s history.”
The $250,000 is the portion of bonuses tied to the company's safety formula. The five executives will retain about $650,000 in cash incentives that are not so encumbered.
They will also retain much more valuable "long-term incentives" in the form of stocks and options.
Legal and Administrative Vice President Eric Brown received a $75,000 cash bonus that was not mentioned in the company's donation announcement. According to the Annual Report:
In recognition of the outstanding achievement by Mr. Brown in leading the response to the unprecedented challenges the Company faced subsequent to the Macondo Incident, in February 2011 the Committee awarded Mr. Brown an additional cash bonus of $75,000."
CEO Steven L. Newman will donate about $93,500 to Transocean's Deepwater Horizon Memorial Fund. Newman received a $900,000 salary in 2010 that ballooned to $6.6 million through categories of remuneration described as bonuses, incentives, stocks, options, and allowances.
For 2011, Newman received a 22 percent raise in his base salary—an additional $200,000.
The larger incentives, stocks and options are not calculated according to a safety formula, but Transocean linked compensation and the company's financial outlook to the Deepwater Horizon disaster in a series of statements that have been overshadowed by the "best year" claim.
For example, the Annual Report justifies executive compensation because executives performed additional duties as a result of the spill:
Many of our senior executive officers… dedicated a significant portion of their time in 2010 following the Macondo Incident to responding to the needs of the victims’ families, coordinating the involvement of additional resources required to stem the flow of hydrocarbons, including drilling rigs and personnel to drill relief wells and other operations as requested by the Unified Area Command, cooperating with the numerous federal, state, and local reviews and investigations into the incident, overseeing our internal investigation of the incident, and managing other demands stemming from these activities, in addition to performing their normal responsibilities.
The annual report also cites a number of accomplishments Transocean achieved as a result of the disaster:
As a direct consequence of the Macondo Incident, we were forced to revise our short-term business priorities and expand our focus to protect the immediate and long-term interests of our Company. In addition to the activities described above, we accomplished the following:
• maintained close contact with our customers in the Gulf of Mexico and elsewhere to keep them informed and to minimize any potential impact on our contract backlog;
• launched a proactive communication program with our employees to facilitate their continued engagement with the Company and to maintain their focus on running safe and efficient operations for our customers;
• conducted a thorough review of our safety protocols, including additional emphasis on safety training and drills for our offshore personnel;
• worked with our banks, insurers and other financial institutions to maintain our reputation as a credible investment grade organization; and
• notwithstanding the tragic loss of life in the Gulf of Mexico, we achieved an exemplary statistical safety record as measured by our total recordable incident rate (‘‘TRIR’’) and total potential severity rate (‘‘TPSR’’). As measured by these standards, we recorded the best year in safety performance in our Company’s history, which is a reflection on our commitment to achieving an incident free environment, all the time, everywhere.
Consequently, we believe that we are well-positioned to execute on our long-term strategic objectives over the next several years.
In addition to Newman and Brown, the executives who donated the bonuses are Chief Financial Officer Ricardo H. Rosa, Executive Vice President Arnaud A.Y. Bobillier, and Executive Vice President Ihab M. Toma.
The world’s largest builder and operator of oil rigs, Transocean built and staffed the Deepwater Horizon, which was leased by BP.
Nine of the 11 workers killed were Transocean employees. The donated bonuses will amount to about $22,700 per family. The Deepwater Horizon Memorial Fund has already allocated about $1.6 million—$145,000 per family.

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